(NOTE: Please refer to several prior posts on the Amazon Nexus Wars for background. )
In response to a North Carolina Department of Revenue request for customer purchase information, Amazon has filed a lawsuit asking a federal judge to block enforcement of the request.
Apparently, the North Carolina DOR is currently engaged in a sales tax compliance audit on the internet's largest retailer. In the course of their audit, NC DOR has requested information from Amazon regarding purchases made by NC customers.
Amazon replied to the request from NC DOR with this Complaint, filed in Federal District Court in Seattle.
The complaint is here: https://www.avalara.com/Media/Blog/AmazonLayComplaint
Amazon alleges that fulfillment of the request from NC DOR would violate First Amendment Free Speech principles and violate the Video Privacy Act by forcing Amazon to reveal content purchases by specific individuals. NC claims that they are not interested in information about content purchased by NC residents, only the amount of sales to NC customers. NC refuses to comment on what it plans to use the purchase information for.
Of note: in the complaint, Amazon lists titles of works sold in NC that it views as controversial or inflammatory. Amazon also drops a not-so-subtle suggestion that some of the more embarassment-inducing titles were purchased by people in the public eye. Ouch.
Amazon's lawyers don't explicitly state that said public figures are members of the NC legislature or NC executive branch. Yet.
Welcome to the big leagues, Secretary of the North Carolina Dept. of Revenue, Kenneth R. Lay. He is named as the Defendant in this civil lawsuit against the actions of the agency he runs.
(Note to Amazon lawyers: a 1962 fim version of Lolita and a few Eminem CDs would not exactly elicit moral outrage in my northwest community, but then again, we are talking south of the Mason-Dixon line...)
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OK, now that the dust has settled a bit on this latest stage in the Amazon Nexus Wars, we can reflect. Take a deep breath ... and forget the lofty Constitutional arguments.
Yeah, thats right, forget the free speech issues, the privacy red herrings. Forget about the proper scope of a sales tax audit curiously being performed on a retailer who, by law, has no obligation to collect sales tax. Forget about all the writers and commenters who took the bait. Forget it all because this battle is about revenues and it is about who is required to collect those revenues for the state of NC. This is about sales tax compliance, and lets face it, that is Avalara's specialty.
Amazon is steadfast in its opposition to collecting sales tax on behalf of the states. The states are steadfast that the sales to persons within its borders are subject to sales tax. This lawsuit, and the compliance audit that spawned it, are simply the parties' latest attempts to force the other to blink.
We note that only two of the relevant participants in this controversy are getting all the press. Amazon serves as proxy for the first class of participants, retailers who sell in places where they are not required to collect sales tax based on US Supreme Court precedent. NC DOR is serving as proxy for the second class of participants, the states who are eager to capture all the transactions they can in their sales tax nets.
Curiously, there isn't a lot of coverage on the third class of participants in this drama. The consumers in the state of North Carolina are standing in for all American consumers, the largest class of stakeholders, yet there is little exploration of the role they play in the continuing story.
Sure, the comments section of every article on this story is full of posts from NC folks who hate sales taxes, viewing resistance to government revenue collection as a civic duty to prevent unharnessed expansion of government; meanwhile, the same comments sections include several posts from NC folks who view taxes as a necessary obligation of their social contract, a tool by which the greater good is served.
So we are hearing from NC consumers. Unfortuately, the reporting on the issue lacks incisive discussion about the existing tax compliance obligations of NC consumers. Obligations that are almost always ignored.
What are those obligations? The compliance obligations already on the books that could put all this to rest? (cue the trumpets...) Consumers Use Tax! Wow, didn't think we'd ever get to put an exclamation point at the end of that phrase.
Consumers Use tax is the mirror image of sales tax, it is a self-reported levy paid to most states for the privelege of using a product or receiving a service in a state. Any sales taxes paid are credited against the use tax due, and since those rates almost always are equal, sales taxes paid 'cancel out' any potential use tax obligation. NC has these rules on its books already. Beyond the statutory obligation to remit use tax, there is also a fundamental fairness argument that the use tax 'levels the playing field' for in-state retailers who are already in compliance with their obligation to collect sales tax upon sales in NC.
Look for more posts on the most ignored tax obligation in the US, the consumers use tax.
In response to a North Carolina Department of Revenue request for customer purchase information, Amazon has filed a lawsuit asking a federal judge to block enforcement of the request.
Apparently, the North Carolina DOR is currently engaged in a sales tax compliance audit on the internet's largest retailer. In the course of their audit, NC DOR has requested information from Amazon regarding purchases made by NC customers.
Amazon replied to the request from NC DOR with this Complaint, filed in Federal District Court in Seattle.
The complaint is here: https://www.avalara.com/Media/Blog/AmazonLayComplaint
Amazon alleges that fulfillment of the request from NC DOR would violate First Amendment Free Speech principles and violate the Video Privacy Act by forcing Amazon to reveal content purchases by specific individuals. NC claims that they are not interested in information about content purchased by NC residents, only the amount of sales to NC customers. NC refuses to comment on what it plans to use the purchase information for.
Of note: in the complaint, Amazon lists titles of works sold in NC that it views as controversial or inflammatory. Amazon also drops a not-so-subtle suggestion that some of the more embarassment-inducing titles were purchased by people in the public eye. Ouch.
Amazon's lawyers don't explicitly state that said public figures are members of the NC legislature or NC executive branch. Yet.
Welcome to the big leagues, Secretary of the North Carolina Dept. of Revenue, Kenneth R. Lay. He is named as the Defendant in this civil lawsuit against the actions of the agency he runs.
(Note to Amazon lawyers: a 1962 fim version of Lolita and a few Eminem CDs would not exactly elicit moral outrage in my northwest community, but then again, we are talking south of the Mason-Dixon line...)
-----------------------------------------------------------------------------------------------------------
OK, now that the dust has settled a bit on this latest stage in the Amazon Nexus Wars, we can reflect. Take a deep breath ... and forget the lofty Constitutional arguments.
Yeah, thats right, forget the free speech issues, the privacy red herrings. Forget about the proper scope of a sales tax audit curiously being performed on a retailer who, by law, has no obligation to collect sales tax. Forget about all the writers and commenters who took the bait. Forget it all because this battle is about revenues and it is about who is required to collect those revenues for the state of NC. This is about sales tax compliance, and lets face it, that is Avalara's specialty.
Amazon is steadfast in its opposition to collecting sales tax on behalf of the states. The states are steadfast that the sales to persons within its borders are subject to sales tax. This lawsuit, and the compliance audit that spawned it, are simply the parties' latest attempts to force the other to blink.
We note that only two of the relevant participants in this controversy are getting all the press. Amazon serves as proxy for the first class of participants, retailers who sell in places where they are not required to collect sales tax based on US Supreme Court precedent. NC DOR is serving as proxy for the second class of participants, the states who are eager to capture all the transactions they can in their sales tax nets.
Curiously, there isn't a lot of coverage on the third class of participants in this drama. The consumers in the state of North Carolina are standing in for all American consumers, the largest class of stakeholders, yet there is little exploration of the role they play in the continuing story.
Sure, the comments section of every article on this story is full of posts from NC folks who hate sales taxes, viewing resistance to government revenue collection as a civic duty to prevent unharnessed expansion of government; meanwhile, the same comments sections include several posts from NC folks who view taxes as a necessary obligation of their social contract, a tool by which the greater good is served.
So we are hearing from NC consumers. Unfortuately, the reporting on the issue lacks incisive discussion about the existing tax compliance obligations of NC consumers. Obligations that are almost always ignored.
What are those obligations? The compliance obligations already on the books that could put all this to rest? (cue the trumpets...) Consumers Use Tax! Wow, didn't think we'd ever get to put an exclamation point at the end of that phrase.
Consumers Use tax is the mirror image of sales tax, it is a self-reported levy paid to most states for the privelege of using a product or receiving a service in a state. Any sales taxes paid are credited against the use tax due, and since those rates almost always are equal, sales taxes paid 'cancel out' any potential use tax obligation. NC has these rules on its books already. Beyond the statutory obligation to remit use tax, there is also a fundamental fairness argument that the use tax 'levels the playing field' for in-state retailers who are already in compliance with their obligation to collect sales tax upon sales in NC.
Look for more posts on the most ignored tax obligation in the US, the consumers use tax.
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